A group of creditors for failed Swiss bank Credit Suisse have launched legal action against a number of executives in its US operations, alleging that a “toxic culture” that “valued short-term gain over long-term trust” had been allowed to prevail.
According to the out-of-pocket bondholders, the 167 year-old conservative Swiss bank had been taken over by “sharp-elbowed New York investment bankers” fixated with short-term success.
The law suit alleges that Credit Suisse’s New York headquarters created a work culture “in which profits were prioritised over sound risk management” and where executives went, at times, to “unethical illegal lengths to acquire and retain high-revenue customers,” which led to a series of public scandals.
These scandals included a criminal conviction for allowing drug dealers to launder money in Bulgaria, a spying case involving a former employee and executive and a massive data breach involving clients’ data. Added to that were the huge losses resulting from failed investments in Greensil Capital and Archegos Capital Management.
In all, Credit Suisse owes some $18bn to bondholders. However, as part of the deal to persuade fellow Swiss bank UBS to take over Credit Suisse, Swiss regulators wrote off around $18bn of high-risk bond debts, leaving a number of bold-holders out of pocket.
Since the UBS takeover was completed, some 120 claims have been filed against the regulator’s write-off.
The bondholders’ legal complaint was filed in Brooklyn. The amount of damages sought will be determined at a later date.